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PennLive/Patriot-News pension forum features entrenched positions

Pennsylvania Pensions ForumPennLive/The Patriot-News, in partnership with the Pennsylvania Chamber of Business and Industry, sponsor a public employee pension forum, "Pennsylvania Pensions: The Bill is Coming Due," at the Hilton Harrisburg.

The forum, co-sponsored by The Patriot-News and the Pennsylvania Chamber of Business and Industry, tackled the commonwealth's current $45 billion unfunded pension liability that is expected to grow to $65 billion by 2018.

View full sizePennLive/The Patriot-News, in partnership with the Pennsylvania Chamber of Business and Industry, sponsored a public employee pension forum, "Pennsylvania Pensions: The Bill is Coming Due," at the Hilton Harrisburg. State Budget Secretary Charles Zogby, left, listens to Keystone Research Center executive director Stephen Herzenberg.
06/05/2013
Dan Gleiter | dgleiter@pennlive.com

“The governor's proposal to move all future employees in 2015 into a defined contribution plan would ensure that we never have again a problem where there's unfunded liability, where politicians are playing with people's pensions, either increasing benefits or not putting in funding to the system,” said state Budget Secretary Charles Zogby.

He was joined on the panel by Keystone Research Center Executive Director Stephen Herzenberg and North Lebanon Schools Superintendent Don Bell.

The panel, conducted as a luncheon at the Harrisburg Hilton, was moderated by Patriot-News Capitol Bureau Chief Jan Murphy.

Herzenberg argued that Corbett's plan caused more problems than it professed to solve.

“Out of the best circumstances from his assumptions, he's getting maybe $1,000 of that $13,000” that taxpayers must pay annually to offset the pension shortfall,” Herzenberg said.

“What the state can't do is put in place defined contribution plans that do as well as defined benefit plans,” he added.

Bell, offered up a call for leadership in the midst of the tit-for-tat bickering that usually features in the pension debate.

“We need one pension system with one contribution rate with one multiplier rate, with a minimum 15 year vesting and it needs to apply to all of us, legislators, government officials, school teachers and administrators like myself,” he said.

“If we put many of these things in place, it will cut my own pension 15-20 percent,” Bell added. “If the commonwealth leadership in the Senate the House and the governor's office are willing to do that, I'm willing to take a cut in my own pension.”

Though Bell argued that the education community “ would be willing to share in the pain” of a fair and balanced solution to the pension problem, he said the issue is suffering from a lack of leadership.

“Someone has to make, and at this particular point the administration, a decision how much and where they want to invest in Pennsylvania,” he said. “And until that's done and until that leadership steps forward I believe the problem with collaboration is too much of the belief of cut for competition.”

But Zogby maintained that Corbett's efforts to popularize the problem and articulate a solution was the leadership Bell called for.

“The governor has been out since last fall talking about the need for pension reform,” Zogby said. “The governor is the only that has on the table a realistic plan that would both keep our obligations to our pension systems as well as give us a chance to avoid deep cuts and rising taxes at a state and local level.”

He also acknowledged that 401(k) retirement plans are far from perfect. But Zogby countered that they're better than the current system and would protect the state from future unfunded liabilities that promise to syphon resources from the already strapped general fund.

“They were never really designed at the outset to be the primary retirement vehicle for people, but the fact is that over the last decades they have become that and there are shortcomings in 401(k)s,” Zogby said.

But naysayers of Corbett's pension reform have offered no alternatives and would allow the current dilemma to only worsen, he added.

“Let's be clear, a lot of the arguments are coming from special interests in Harrisburg who are against pension reform,” Zogby said. “Their goal is to muddy the waters, to instill fear and spread mistruths, and hope that enough noise will work against good public policy and prevent its' progress.”

* The article is corrected to reflect that the governor's defined contribution proposal would only apply to new state employees.

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